Ford Plans Closure of Oldest Factory in Brazil

Ford
Motor Co announced on Tuesday its decision to shut down its oldest
factory in Brazil. This will result in Ford exiting from heavy
commercial truck business in South America. This move will cost 2700
jobs, which will help Ford with its restructuring plan in an attempt
to end losses globally. Previously Ford had said that the
global reorganization would cause plant closures in Europe and impact
thousands of jobs, resulting in $11 billion in charges.

Following
the announcement on Tuesday, investors and analysts were expecting a
similar reorganization in South America. Jim Hackett, Chief
Executive at Ford, said that the investors would not have to wait too
long for the reorganization plan in South America. Ford has
slated the factory in Sao Bernardo do Campo for closure. It has been
operating since 1967.

The
factory closure signals that Ford is planning on focusing on the core
of its car business. However, the job cuts have caused a major blow
to the new administration of President Jair Bolsonaro, which is
trying to fight the unemployment rate which is currently above 11
percent.

The
latest cuts by Ford have caused investors to keep a close eye on the
company’s allegiance with Volkswagen AG. The two companies have
pledged to work together on different projects, which will also
include combining forces in regions like South America. Ford
shares went up by 3.4 percent in New York. The factory closure is a
huge blow to the industrial outskirts in Brazil. The automotive
industry put up roots and helped with industrial growth in Sao Paulo.

The
Sao Bernardo Mayor complained angrily about the lack of warning or
notice by Ford regarding the factory closure. The company had not
discussed its plans for closing down the factory with the workers.
The move to close the factory will directly affect 2800
families and indirectly affect 2000 families.

The
spokesperson for Ford declined to give an exact figure on the number
of jobs that will be cut but acknowledged that there would be a
significant impact. The automaker will work with unions and affected
employees on the next steps.

Lyle
Watters, Ford South America President, said that the company remains
committed to South America. Ford sales grew by ten percent
between 2017 and 2018 in Brazil, which was behind by 15 percent of
the post-recession increase for the automobile industry as a whole.
It ranked fourth in the trucks business with sales coming to
less than half of Volkswagen and Mercedes Benz.

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